ConocoPhillips posts quarterly earnings of $2.8 billion, raises dividend

ConocoPhillips had third-quarter 2023 earnings of $2.8 billion, a decrease from $4.5 billion in third-quarter 2022. Excluding special items, third-quarter 2023 adjusted earnings were $2.6 billion, compared with third-quarter 2022 adjusted earnings of $4.6 billion. Special items in the current quarter mainly consisted of a tax reserve reversal benefit and a gain associated with the divestiture of a Lower 48 equity investment. The operator detailed a 14% increase in its quarterly dividend due to higher-than-expected earnings for the quarter.

The decline in earnings and adjusted earnings from third-quarter 2022 was primarily attributed to lower commodity prices. The company’s total average realized price was $60.05/boe, 28% lower than the $83.07/boe realized in third-quarter 2022.

Oil, gas production

Production for the quarter was 1.806 MMboe/d, an increase of 52,000 boe/d from the same period a year ago. After adjusting for impacts from closed acquisitions and dispositions, third-quarter 2023 production increased 49,000 boe/d or 3% from the same period a year ago. Organic growth from Lower 48 and other development programs more than offset decline and downtime.

Lower 48 delivered production of 1.083 MMboe/d, including 722,000 boe/d from the Permian basin, 232,000 boe/d from the Eagle Ford, and 111,000 boe/d from the Bakken. In Canada, Surmont Pad 267 achieved first steam and Montney’s CPF2 came online, both in late September. Turnarounds were successfully completed in Norway and Alaska.

For the quarter, cash provided by operating activities (CFO) was $5.4 billion. Excluding working capital, ConocoPhillips generated CFO of $5.5 billion and received proceeds of $200 million primarily from the sale of a Lower 48 equity investment. In addition, the company funded $2.5 billion of capital expenditures and investments.

ConocoPhillips further diversified its LNG portfolio by signing a 15-year throughput agreement for about 1.5 million tonnes/year (tpy) of regasification at the Gate LNG Terminal in the Netherlands.

Quarterly dividend, VROC

ConocoPhillips increased the quarterly ordinary dividend by 14% to $0.58/share, payable Dec. 1, 2023, to stockholders of record at the close of business on Nov. 14, 2023. The operator paid its fourth quarter variable return of cash (VROC) of $0.6/share on Oct. 16, 2023, to stockholders of record at the close of business on Sept. 28, 2023.

The quarterly ordinary dividend increase is “consistent with our long-term objective to deliver top quartile growth relative to the S&P 500,” said Ryan Lance, chairman and chief executive officer.

Beginning in first-quarter 2024, ConocoPhillips plans to pay its quarterly ordinary dividend and VROC concurrently and will announce such payments in the same quarter they will be paid.

Outlook

ConocoPhillips completed the purchase of the remaining 50% interest in Surmont asset in Alberta in October. All guidance has been updated to reflect the acquisition of additional interest in Surmont but excludes any impacts from the previously announced Australia Pacific LNG (APLNG) transaction (OGJ Online, Mar. 27, 2023; June 5, 2023).

Fourth-quarter 2023 production is expected to be 1.86-1.9 MMboe/d. Full-year production is expected to be about 1.82 MMboe/d, slightly higher than prior guidance of 1.80-1.81 MMboe/d due to the Surmont acquisition.

Full-year guidance for adjusted operating cost was updated to $8.6 billion versus the prior guidance of $8.3 billion, reflecting the increased working interest at Surmont, increased Lower 48 non-operated activity and inflationary impacts primarily in the Lower 48. Full-year guidance for depreciation, depletion, and amortization was updated to $8.3 billion versus prior guidance of $8.2 billion primarily due to the Surmont acquisition.